Dupee Family Professor of Social Sciences and Professor of Economics
Gauti B. Eggertsson
Macroeconomist. Monetary and fiscal policy over the business cycle, from a modern and a historical perspective.
Recent work
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The Forward Guidance Puzzle is not a Puzzle
The forward guidance puzzle in New Keynesian models arises from an implausibly large monetary regime change. Calibrated to four regime changes during the Great Depression and disciplined by long-term bond yields, the model's predictions match the historical data.
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Liquidity Traps: A Unified Theory of the Great Depression and the Great Recession
A unified framework explaining the U.S. Great Depression, the U.S. Great Recession, and Japan's Long Recession as liquidity traps driven by negative natural interest rates, and what that implies for monetary credibility and fiscal policy.
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Revisiting the Phillips and Beveridge Curves: Insights from the 2020s Inflation Surge
Prepared for the 2024 Jackson Hole Economic Policy Symposium. Proposes an Inverse-L New Keynesian Phillips curve and a Beveridge-threshold unemployment rate: once the labor market crosses into a labor-shortage regime, inflation becomes sharply more sensitive to demand and supply shocks.
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The Slanted-L Phillips Curve
A slanted-L curve effectively captures the non-linearity of the Phillips curve, as shown using cross-country data from major industrialized economies since 2009. The model demonstrates that at high unemployment, demand increases have limited inflationary effects, while at low unemployment, labor shortages amplify both inflationary pressures and the impact of supply shocks.
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The Inflation Surge of the 2020s: The Role of Monetary Policy
The Fed’s substantial revisions to its monetary policy strategy in August 2020 and its forward guidance contributed to the largely unanticipated and most definitely unwelcome surge in inflation during the pandemic.
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It’s Baaack: The Inflation Surge of 2020s and the Return of the Non-Linear Phillips Curve
This paper introduces a non-linear New Keynesian Phillips curve (Inv-L NK Phillips Curve) to explain the inflation surge in the 2020s, using job vacancies relative to unemployed workers as a measure of economic slack. It argues that wage rigidity and labor market frictions create strong nonlinearities, suggesting that inflation can be reduced without a severe recession, with the recent surge largely driven by a labor shortage.
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Negative Nominal Interest Rates and the Bank Lending Channel
Household deposit rates are bounded below, so once policy rates turn negative the pass-through to lending rates and credit weakens and bank equity falls. A banking-sector model yields a sufficient statistic for when negative policy rates are expansionary and when they are not.
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Gauti B. Eggertsson
Research
Research
Working papers, published articles, commentaries, and older notes.
Replication Files
Replication Files
Code and data for replicating published results.
Teaching
Teaching Materials
Lecture notes, slides, and problem sets.
CV
Curriculum vitae
Curriculum vitae of Gauti B. Eggertsson (PDF).
Podcasts
Podcasts
Conversations about monetary policy, inflation, and the liquidity trap.
Iceland
A Guide to Iceland
What to do in Iceland, from a Reykjavík native who gets asked a lot.